Abstract: Taxes are fundamental to the progress of a nation. Therefore, it is essential for organizations to strategize their tax obligations to effectively manage their current profits while avoiding penalties associated with tax evasion. Therefore, this study sought to investigate the effect of effective tax rate on firm value of commercial banks in Nairobi Security Exchange’s listed banks in Kenya. The research employed a mixed methodology that incorporated both explanatory and correlational research approaches. The target population for this investigation comprised 11 banks that are listed on the NSE. As a census study, it encompassed all 11 banks listed on the NSE. The analysis utilized panel regression, which integrated both time series and cross-sectional data. The information for all variables under study was sourced from the financial statements and annual reports of the commercial banks listed, covering the period from 2014 to 2022 on the NSE. The data were organized and presented in tables and figures. Throughout the data analysis, various diagnostic tests were conducted, including pre- and post-estimation tests. These tests encompassed stationarity tests, normality tests, multicollinearity tests, and heteroskedasticity tests for both fixed and random effect models. 1. The regression analysis indicates that the effective tax rate (ETR) has a statistically significant positive impact on firm value (Coefficient = 850.593, p < 0.05). The results of this study offer significant insights into the determinants of firm value within the banking industry, highlighting important considerations for tax planning and financial management strategies. The findings indicate that banks ought to prioritize the optimization of their tax planning approaches and capital structure to improve their overall firm value.
Keywords: Tax Rate, Firm Value.
Title: EFFECT OF EFFECTIVE TAX RATE ON FIRM VALUE OF COMMERCIAL BANKS IN NAIROBI SECURITY EXCHANGE’S LISTED BANKS IN KENYA
Author: Didacus Migunga Otieno, Prof. Tibbs Charles
International Journal of Social Science and Humanities Research
ISSN 2348-3156 (Print), ISSN 2348-3164 (online)
Vol. 12, Issue 3, July 2024 - September 2024
Page No: 381-387
Research Publish Journals
Website: www.researchpublish.com
Published Date: 23-September-2024
